Once a shining beacon of American capitalism, malls around the U.S. are failing at an alarming rate due to a combination of shifting consumption patterns, years of underinvestment by mall owners and a spate of retailer bankruptcies over the past 12 months that have left large swaths of once prime real estate empty (see "Number Of Distressed US Retailers Highest Since The Great Recession").

Now, as the vacant square footage grows larger, mall owners are being increasingly forced to turn to non-conventional tenants to fill empty space. Per the Wall Street Journal, the latest target of mall owners is yet another struggling industry, grocers, with everyone from Whole Foods to Kroger looking to snap up square footage at discount prices.

Natick Mall in Natick, Mass., is leasing 194,000 square feet of space vacated by J.C. Penney Co. to upscale grocer Wegmans Food Markets Inc., which is planning to open a store in 2018.

College Mall in Bloomington, Ind., plans to bring in 365 by Whole Foods Market in the fall.

Grocery giant Kroger Co., meanwhile, has purchased a former Macy’s Inc. location at Kingsdale Shopping Center in Upper Arlington, Ohio, and plans to build a new store in its place.

Of course, mall owners tout the defensive nature of grocers who are, at least for now, more immune to online retailers and the economic cycle than traditional retailers. And while there may be some truth in those statements, they certainly overlook some major challenges associated with adding grocers to mall spaces including the fact that malls are typically intended to attract customers from a much larger radius whereas traditional grocery shoppers generally prefer more local options.

Moreover, adding grocery stores as an anchor tenant is unlikely to help the other retailers in the mall. Lets face it, grocery shopping is generally not a pleasant experience but rather a weekly chore that people generally like to do as quickly as possible...you're not going to do your grocery shopping and then casually peruse the Express store while your ice cream melts in the car.

But supermarkets might not do much to lift other retailers in struggling malls, analysts said. Grocery shoppers, especially seniors, often are sensitive to the distance between their car and the store, and might not want to navigate busy malls with grocery bags in tow, or supermarkets with mall purchases in hand.

“You’re not going to buy a Louis Vuitton bag or a dress when you’re carrying your groceries,” said Jeff Edison, chief executive of Phillips Edison & Co., an owner and operator of grocery-anchored shopping centers across 34 states. His company’s neighborhood shopping centers are smaller and closer to customers, who typically live within 3 miles of a center.

“It’s a fine line how this strategy is implemented,” said Thomas Dobrowski, executive managing director of capital markets at real-estate services firm Newmark Grubb Knight Frank. “The addition of a grocery anchor is not necessarily complementary to the other stores, particularly fashion retailers.”

But grocers aren't the only new tenants taking over cheap mall space. As Market Watch points out, everything from doctors offices to high schools are moving into what used to be prime real estate.

Beneath some positive stats, shopping malls are facing serious problems that threaten their health, including a shift to non-retail tenants and forecasted rent declines, according to Wells Fargo analysts.

Wells Fargo stresses a need to look deeper at high mall occupancy rates. Occupancy for the fourth quarter of 2016 was 93.6%, near the 93.3% for all of 2015, according to data from the National Council of Real Estate Investment Fiduciaries, cited by the International Council of Shopping Centers. However, the type of tenants many malls have is shifting to a lower-quality occupant for the overall health of the retail-focused mall, the analysts said.

"[F]or example, there are far more ‘mom-and-pop’ stores, and some malls have repurposed space for non-retail uses such as doctors offices, town libraries and even a high school,” Wells Fargo said in the report published Sunday. “Mom-and-pop” retail in a mall setting may generally be seen as a more-vulnerable long-term tenant and less of a traffic pusher without big-name brand backing.

But we're sure it will all work out just fine and wall street will go on buying those mall reits with reckless abandon...you know, because dividend yields.